LIKE IT or not, the world operates on money. Without money we would not have a place to live, food to eat or clothes to wear. Yet making ends meet, meeting the challenges of income and outgo — balancing the family checkbook — can be a rewarding experience. Planning personal budgets as examples for our readers worldwide must be viewed from as broad a perspective as possible. Common principles will help you budget no matter where you live or what language you speak or what your currency is called. You should apply the principles to your own distinctive national and personal circumstances.

A Worldwide Plan

One thing you can know for sure, rising good times are over for now. The Western world enjoyed unparalleled prosperity from the end of World War II until recent times. Wages and salaries generally increased at a faster pace than the cost of living. You need to gear down now for changes in your standard of living. When we think of budgeting from a worldwide perspective, we have to take into consideration great cultural differences in various budget areas. One family might already have a home paid for and find the cost of housing a minimal part of the budget. In other countries, the cost of renting a home, apartment or flat will take 40 percent or more of the family income. Food costs vary greatly from one nation to another. Recommended percentages of income to allocate the various budget areas must take into consideration your own personal circumstances. Learning to calculate your needs in proportion to your income is a very important principle.

First Things First

The practice of budgeting based on this percentage principle is an ancient custom. We are first introduced to it in the pages of the Bible in the time of Abram or Abraham almost 4,000 years ago. After winning a victory over those who had taken his nephew, Lot, captive, Abram was returning home. On the way he neared what would later become the city of Jerusalem. It was then called Salem. The king of that city, Melchizedek, came to meet Abram. Melchizedek was also the priest of God (Gen. 14:18). Abram was God's servant. He lived according to God's law, statutes, commandments and judgments (Gen. 26:5). When Abram met Melchizedek, king of Salem and priest of the Most High God, what did Abram do? "... And he gave him tithes of all" (Gen. 14:20). The word tithe means "tenth," or 10 percent. Abram had taken spoil in the victory over the Canaanite kings. When he met God's priest, Abram gave 10 percent of what had been taken. Thus we see tithing — giving 10 percent to God — an ancient law. From this, we can derive an important principle of budget allocation — the percentage system. Let's learn from this example of tithing. What God has done is give mankind control over the earth and its resources. When God created the first humans, he " blessed them, and God said unto them, Be fruitful, and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and over every living thing that moveth upon the earth" (Gen. 1:28). God, who owns the entire universe, essentially said to man: "The earth is yours to use. You can farm it. You can graze stock on it. You will discover minerals and other natural resources in its soil, in the oceans and in the atmosphere of the earth. Use it. Produce from it. Live off of it. But 10 percent of all the increase you take from it is mine. The 90 percent remaining will be yours to discreetly use." God has used that 10 percent for his work over the ages. In the days of Abram, Melchizedek was God's priest — the tithe went to him. After God called the nation Israel out of Egypt under the direction of Moses, God used the tithe to pay the Levitical priesthood for their work in the religious and educational services for the nation (Heb. 7:9). After Christ established the New Testament Church, tithes were to be used for the work of God through the Church. The very first step in successful financial management is therefore to tithe, to present 10 percent of one's adjusted gross income to the service of God. Once a person determines to step out in faith, he finds God has given a promise to those who obey him and practice tithing.

A Partnership with God

Notice it: "Bring ye all the tithes into the storehouse... and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it" (Mal. 3:10). You see, tithing establishes you in partnership with God. If you provide for his work, God will see to it your needs are provided for. God will bless you and help you. But, you must do your part. You must establish good work habits and practice good work ethics. These are essential ingredients to success in your employment. A person who trusts in God ought to be the best possible example of an employee or businessman. He should be industrious, dependable, hardworking. By combining the principles of diligent work and faithfully trusting God, you establish the basis for steady employment and receive the benefit of God's special direction.

Tithing Teaches Budgeting

The word budget means proportioning your income into a series of categories. Think of it as a percentage of the money you have available. The first 10 percent of your increase is God's. The remaining 90 percent can now be allocated. But how much and for what? There are two categories into which you must divide your budget. The first area we will call FIXED EXPENSES. Fixed expenses are those that will come every month and will be about the same each month. Second, there are VARIABLE EXPENSES. You can also call these funds DISCRETIONARY MONEYS. These are expenses we will all have, but the amount we spend from month to month might vary considerably. A fixed expense such as your monthly mortgage payment or rental payment will usually not significantly change. Other such fixed expenses will be cost of utilities — especially heating costs in winter — telephone, food, household expenses and transportation. After your tithes and offerings, there is a part of the budget over which you have little control: TAXES. The government has to function and has chosen to operate on a percentage of each wage earner's or businessman's income. In most nations taxes are withheld before you even receive your pay. In addition to taxes, there are other funds that are withheld from your check. These include payment into a social welfare or social security fund, pension plans, required insurance, sometimes union dues and other smaller amounts. Since they are withheld, you have practically no control over them. But

"The Western world enjoyed unparalleled prosperity from the end of World War II until recent times...: You need to gear down now for changes in your standard of living."

they must be calculated into your budget. The three largest expenses most families incur are the cost of housing, the cost of food and in northern climates the cost of home heating. In some cases, there will be little left after these major items. Most families will find that food and housing will consume just more than half their budgetary allocation. In our modern world, a majority of families purchase and operate at least one automobile as a principal means of transportation. Some families may be able to rely on public transportation such as buses or subway systems to provide a portion of their transportation needs. The transportation cost will also be a fairly fixed expense. A budget must be established for fuel and maintenance cost of an automobile or for the fares for transportation. Another fixed expense is insurance. Most families carry some form of life insurance, health and accident insurance, homeowners' or renters' insurance, and automobile insurance. In a number of nations, many of these insurance items are provided by the state and are part of the system of taxation one is charged in that nation. In other nations, insurance is a private matter and must be paid for separately. Many employers will provide insurance programs to employees and will at least cover life insurance as well as health and accident insurance. Once established, this area will be part of the fixed budgetary allocation of a family. The variable expenses are simply what the name implies. There are a variety of budget areas that are determined by a family's needs and based upon the amount of money available for such variable expenses once the fixed expenses have been budgeted. Variable expenses include the cost of clothing — certainly a necessity — but usually not allocated on a monthly basis. In addition there is expense for entertainment, recreation, vacation and travel, savings, gifts and personal allowances. The accompanying pie chart will give you an idea how these expenses are broken down in an average or typical U.S. family. Remember, your budget percentages may vary considerably from these. Once you determine how you're spending your money, use the blank pie chart to fill in your personal budgetary expenses. It will help you see how you compare to the average and will help you evaluate if you need to make changes.

Where Is It Going Now?

Before you can fill in your own chart, you have to know how you spend your income. Most of us have said more than one time, "I just don't know where it all goes." Or, "How come my outgo always exceeds my income?" Or, "I just can't seem to make ends meet." The first thing you must do to manage successfully the 90 percent of your income after tithes is to know where it all goes. Many families simply do not know. If you are not now aware of how you spend your money, you have to come to grips with where it's going. Finding out how you spend your money is going to take a little work and effort. But it can be fun. Involve the whole family in the project. A husband and a wife sitting down together with the children will draw the whole family together. Husbands and wives will understand each other's needs and the children will understand much more when you say, "We simply can't afford it."

The Three-Month Analysis

Now, you are ready to start your own personal budget analysis. Use the next three months to analyze your outgo. The work involved is well worth the effort. This means keeping records of where your money goes. We've produced an outline that will help you keep track of your expenses over the three months. If possible, have photocopies made of this page so you can experiment with the best means of keeping your own records. You will find during the three-month analysis you will be making changes in the way you spend your money. There are two major ways to keep track of your expenses. Choose the one that best suits your family's needs. One efficient way to keep track of expenses is to write a check for almost all items in your budget. Many banks today offer free checking services or at least offer low-cost monthly service charge accounts. By writing a check, you will have a written record in your check register and you will have a canceled check that you receive back from your bank. Be sure you write in your check register as well as on your check what the expense is for. By keeping track of the budget categories such as we recommend on the accompanying chart, you will be able to see where your money is going. Of course, checking accounts are not the only way to keep records. Many families may prefer not to write so many checks or to even retain a checking account at all. If this is the case, a record book or a notebook will be helpful in keeping track of how you spend cash. It is going to require special effort by all members of the family to write down to whom all expenditures are made. It is amazing what you will discover when you start keeping this kind of budgetary record — you find where the money really goes. Many families find they are spending far too much in some areas and perhaps not enough in others. Some will be eating out too much. Others will find they are spending too much on recreation. Others will

"The most successful way to plan for your future is to establish sound — budgeting principles here and now.... Then, you must establish some realistic goals for the future."

find the transportation car is costing too much in repairs. You will discover these things simply by writing it all down and adding it up at the end of each month. After the first month, you will have a good idea of where all your money is going. During the second month, you will see where you might make changes and adjustments. During the third month, you can experiment with these changes. By the end of three months you should have an idea of what kind of a budget you would like to set up in permanent form. Don't let yourself get discouraged during this three-month analysis. Once you have established your budget, you probably will not need to keep nearly so detailed a record as you did during this first three months. But many families give up and quit during the budget analysis period and never really get a grip on their personal finances. No matter which way you choose to keep track of your expenditures you must find out where your money is going. And during the three month analysis, be detailed. For example, if you give cash to one of your children for a movie, be sure you allocate it to its proper budgetary area — entertainment. You don't want to have too much money going out into unaccounted — for, miscellaneous cash. You have to keep track of the flow. At first it may seem a bother to bring home the receipts and keep records of purchases from the grocery store, the hardware store or of postage stamps you bought. But it will later yield good fruit when you analyze where it all goes. And bringing home receipts can have a double benefit. Not only will it keep track of your budget, you will have a receipt in case you need it to exchange an item or have repairs made. How many times have you found you could not find a receipt when you needed it most? If you have a standard place where you put all your receipts, they will always be available. You don't have to set up a complicated filing system. A shoe box will do quite well. Perhaps a special drawer in the kitchen or bedroom will serve the purpose. Of course, you can set up a very detailed accounting and records system if you desire.

Sticking to Your Budget

After three months you will have a fairly good idea of exactly what you have been spending and how you ought to spend your money. If your family project has been successful, each member of the family will understand his or her individual responsibility in guiding the family to financial success. There will be many temptations to vary from the budget you establish. In most cases, you will have to make up your mind you simply will not be able to vary from the established budget you set up. Of course how much you have in the various budget areas will depend on your outgo and the cost of living in your region. If you find your variable expenses have enough budget allocation, you will have what we call "discretionary" funds available for a limited variety of personal expenses. Sending the children to summer camp, buying a new television set or increasing the children's allowance are all nice if we can afford them. But if they cannot be afforded, these kind of expenses can be foolish expenses and plunge families into deep financial debt. So don't let anything deter you from your goal of successful family budgeting.

Finding Your Financial Worth

As the years go by, it's surprising how much value can be built up in an average family. If you've purchased a home, furniture, an automobile, jewelry and other items of permanent value, you will find you have established a net worth considerably more than you might at first think. Perhaps you have a savings account, value in a retirement or annuity plan, stocks investments or cash value that is built in life insurance. While you may be struggling to make ends meet, you may also find you have been accruing a personal worth in excess of your own expectations. In order to establish future financial goals, you should know where you presently stand. You must get control of your budget. A major reason to get control of your budget now is to be able to control expenses and to establish future financial goals. So how much are you worth? Another chart we have produced will help you determine your net worth. Gather your records together and fill out the chart. It may surprise you how much — or how little — value you have. In order to properly fill in the blanks, you may have to have an updated appraisal made on your home or properties you own. You can estimate the value of your automobile by looking in the classified pages of your newspaper to see what similar cars are selling for. By visiting a furniture store you can see how much your furniture may be worth or what it would cost to replace at today's value. You should have easy access to the balance in your savings account and other financial investments you may have made. Your insurance agent can let you know the cash value you may have built in an insurance plan. To figure your net worth, add up your assets and subtract from them all the liabilities. The bottom line is how much you are worth financially.

Planning Your Financial Future

Where do we go from here? That depends on where you find yourself now. The three-month analysis accompanied by your statement of net worth will help you see where you must now place your financial priorities. If you have found yourself deep in debt, your goal will be, obviously, to get out of debt. If, on the other hand, you have found yourself in fairly secure financial position, you will want to establish some priority goals for the future. Depending on your circumstances, those goals might include any of the following: the purchase of a home, college education for the children, planning for retirement, care for aged parents or for future additions to your own family. Those goals obviously will vary from family to family. But the most successful way to plan for your future is to establish sound budgeting principles here and now. You must get yourself out of debt if you are in debt. Then, you must establish some realistic goals for the future. The best goal of all will be to establish your partnership with God and the self-determination to know how to budget your income.